PGA cranks up support for grain on rail

31 Mar, 2011 08:30 AM
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Representatives of PGA and connections to the PGA's competition on rail campaign.
Representatives of PGA and connections to the PGA's competition on rail campaign.

THE Pastoralists and Graziers Association's (PGA) has launched a competition-on-rail campaign.

The PGA has been vocal in its positive view on freight competition and the negative ramifications of CBH's Grain Express monopoly.

But despite its members' willingness to speak out about the current WA rail freight network, it was the state of the network's future which caused alarm bells to ring in the PGA camp.

PGA Western Graingrower chair Rick Wilson spoke at the campaign launch and reiterated the PGA's view that competition in the rail network was paramount to have an efficient and best value grain haulage system in WA and announced the PGA had written a letter to the Australian Competition and Consumer Commission (ACCC) chairman, Graeme Samuels saying just that.

He said as well as saving costs to growers, more competition on rail would also protect local communities by keeping grain on rail running through small Wheatbelt towns.

"Competition will lower transport costs, increase grower profitability, provide a least cost pathway to port for grain growers and increase the competitive reputation of WA grain," Mr Wilson said.

"It will also take trucks off roads reducing road maintenance costs and increasing road safety."

He said the PGA wanted the most efficient rail system for WA's grain industry with multiple operators able to compete for customers which would lessen costs for producers and reduce hazardous impacts on country roads.

The PGA believed support for competition on rail had been expressed by all sectors of the WA grain industry including growers, traders and members of both Local and State governments.

"CBH's Grain Express prohibits competition throughout the supply chain in favour of protecting CBH's monopoly," Mr Wilson said.

The letter to the ACCC addressed broad recognition from industry and said Grain Express was originally introduced to benefit the WA grain industry after its deregulation a number of years ago.

The PGA had since come to the conclusion the new and introductory era of industry deregulation had passed and three years down the track the WA grain industry had matured to the point where Grain Express was no longer needed.

Mr Wilson said the current monopoly had proven to be a disservice to growers which added costs and held back industry growth.

"Any perceived benefits for maintaining a monopoly are being outweighed with WA's ability to export at stake," he said.

"A monopoly doesn't provide certainty that adequate rolling stock is available to service all grain growers, there are no guarantees the maximum amount of grain will remain on rail and there is no assurance that prices will remain transparent."

Group manager of the Australian Railroad Group (ARG) Ken Potts said ARG had been involved in the movement of WA grain since the 1930s and wanted to exist in the grain freight space.

"Although ARG wants to make very clear from the outset it respects the rights of other competitors to transport grain in WA," he said.

"At the same time ARG strongly believes it should have the chance to compete for that space on a level playing field.

"If we're good enough we want growers and exporters to be able to choose to use ARG as their rail freight service provider.

"We're not afraid of competition, instead we welcome it."

Mr Potts said he strongly supported the PGA's call for greater competition within the grain supply chain in WA of which rail was an important part.

In December the ACCC made a draft ruling on Grain Express in favour of revoking the exclusive dealing notification.

Since then opponents of Grain Express had made clear their views the system allowed CBH to leverage its market power in supply, receival, storage and handling services to prevent competition to supply transport services to grain customers who use CBH's upcountry storage facilities.

The same sentiment was also reflected in the PGA's recent letter to the ACCC.

"Grain Express is a monopoly that has passed its use-by date," the letter said.

But CBH's general manager of operations Colin Tutt wasn't worried.

"We stand by our views that Grain Express provides great value to the growers of WA," Mr Tutt said.

"Any benefit of a slight increase in competition will be undermined by significant loss of efficiencies resulting from the removal of Grain Express."

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READER COMMENTS

Dissappointed
1/04/2011 12:24:05 PM, on Farm Weekly

A couple of things here. Firstly CBH is our company working for us, not some commercial company working for and paying dividends to investor shareholders. The PGA seems to have missed this point. Any profits made are put back into facilities and services for growers. The PGA seems to think CBH is out to rip us off and are trying to send panic messages out like some of the rubbish in this article. Secondly, why did CBH introduce Grain Express? To monopolise the transport system? This reader thinks the real reason is the system was failing and all users were being taken for a ride. Someone had to step in and stop the rot. Westrail/ARG have had many years to influence the maintainence on tracks and keep costs at a reasonable level. What has happened - a lot of tracks have been let go with very little having been spent on them. A fault of the govt in not overseeing the contract. It will be interesting to see how much ARG reduce their rates to compete and we then need to ask why were the charges not kept at reasonable levels previously?
Xd
1/04/2011 8:31:34 PM, on Farm Weekly

Who is funding PGA - ARG? As the potential candadate for Liberal in O'Connor on the next election, Rick Wilson needs to get out and listen to the real growers in the bush. He currently is not representing the consensus from the bush!

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